Problem - Park Co.'s long-term available-for-sale portfolio at December 31,2010, consist of the following.
Available-for-sale Securities Cost Fair Value
80,000 shares of Company A common stock $1,070,600 $980,000
14,000 shares of Company B common stock $318,750 $308,000
35,000 shares of Company C common stock $1,325,500 $1,281,875
Park enters into the following long-term investment transactions during year 2011
Jan.29 Sold 7,000 shares of Company B common stock for $158,375 less a brokerage fee of $3,100.
Apr.17 Purchased 20,000 shares of Company W common stock for $395,000 plus a brokerage fee of $3,500. The shares represent a 30% ownership in Company W.
July 6. Purchased 9,000 shares of Company X common stock for $253,125 plus a brokerage fee of $3,500. The shares represent a 51% ownership in Company Y.
Aug.22 Purchased 100,000 shares of Company Y common stock for $750,000 plus a brokerage fee of $8,200. The shares represent a 5% ownership in Company Z.
Dec.9 Sold 80,000 shares of Company A common stock for $1,030,000 less a brokerage fee of $4,100.
The fair values of its investments at December 31,2011 are: B,$162,750;C, $1,220,625;W, $382,500; X,$236,250; Y,$1,062,500; and Z, $557,600.
Required:
1. Determine the amount Park should report on its December 31,2011m balance sheet for its long-term investments in available-for-sale securities.
2. Prepare any necessary December 31,2011,adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities.
3. What amount of gains or losses on transactions relating to long-term investments in available-for-sale securities should Park report on its December 31,2011m income statement?